Co-produced with Long Player

The midstream sector is full of challenges, and the current uncertainties are very tough on this sector. There are many reasons for this which includes a rapidly slowing U.S. oil and gas production which could negatively impact many midstream companies. Therefore, in this sector, income investors are clearly best served by investing in the best company with the best management. Clearly the best-of-breed is Enterprise Products Partners (EPD). We explain later in this report on why EPD is one of the best high-yielding companies to buy and hold for the very long term.

Tax Note: EPD issues a K-1.

Recent Performance

The energy sector remains out of favor by investors. However, during the past several months, EPD has been a leader in the industry. It has strongly outperformed all the energy indexes including Energy Index (XLE) and the midstream index (AMLP) over the short-term and long-term periods. During the past six months, EPD has returned 20% including dividends.

ChartData by YCharts

Importantly for income investors, we are patient. We are happy to collect high income from super solid companies until Mr. Market realizes that this is one of the best companies to buy and hold for the long run.

For investors, the good news is that EPD trades at very cheap valuations. EPD shares still have a long way to go to approach historical valuations while still offering a sustainable and growing 11% yield. The appreciation potential for EPD is very rare for an income type investment. When one also considers that EPD traditionally grows at a decent pace, these shares could offer a retiree that unusual combination of appreciation and growing generous distributions for the foreseeable future.

Long-Term Debt

This company has felt the pressure to lower debt levels as have many competitors